Budget Deal Reveals Republican Shell Game on Coal

By Christopher Flavelle -
Jan 15, 2014

This week's budget deal suggests Republicans are getting over their aversion to compromise. Other bad habits linger -- including the aversion to any restrictions, anywhere in the world, that could possibly hinder the U.S. coal industry.

In December, the U.S. Export-Import Bank, which provides financing for countries seeking to buy American products or services, said it would no longer help fund coal-fired power plants overseas. There were exceptions: Projects that capture and store their carbon emissions would still eligible, along with projects in the world's poorest countries, where coal may be the only affordable option.

Republicans used this week's budget deal to push back on the bank's move. Under the legislation announced Tuesday, the bank must also consider applications from a group of middle-income countries, including India, Pakistan and Vietnam. (The categories are determined by the World Bank; for a list of countries that would be newly eligible for coal-plant financing under the budget deal, see the "IDA-blend" countries here.)

The practical implications of this change are hard to predict. The bank has financed only a handful of coal-fired plants in India in the past decade, and turned down another in Vietnam. It's hard to predict whether anyone building a coal plant overseas, after hearing in December that such projects would no longer qualify for financing, will now change course and apply for aid.

To the degree this change does have an impact on the decisions of those building power plants overseas, it will include reducing demand for -- and, by extension, the development of -- carbon-capture and sequestration technology. Using that technology would otherwise have been the only way those plants could get U.S. funding.

What's more interesting is what this change says about Republicans' broader argument about climate. Whatever steps Democrats propose to reduce U.S. carbon emissions -- cap and trade, a carbon tax, tighter rules for power plants -- Republicans respond that there's no point cutting U.S. emissions if other countries aren't cutting theirs.

So there's a special irony in Republican attempts to limit the ability of the U.S. government to influence carbon emissions overseas. There's precious little the U.S. can to curb those overseas emissions (a fact that makes Republican insistence on global action as a precursor to U.S. changes seem ever so slightly like a spoiler argument). But it can refuse to finance the sources of those emissions, and use that refusal to influence other countries to do the same.

By frustrating those efforts, Republicans are revealing their argument about global action to be a ruse. The obstacle to regulating the coal industry at home isn't that other countries aren't doing the same. If anything, the reverse is true: The obstacle to fighting climate change abroad is that it might hurt the coal industry at home.

(Christopher Flavelle is a member of Bloomberg View's editorial board. Follow him on Twitter.)